Shopify (NYSE:SHOP) is a business seemingly tailor-made for a world where physical retail stores are closed and consumers are afraid to leave their homes. The company sells subscription products that provide everything someone would need to sell products online. It's not crazy to think that e-commerce growth will accelerate in the long run because of the pandemic, and Shopify is well positioned to capture that growth.
The market has latched onto this story and then some. Shopify stock has more than doubled since bottoming out in March, pushing the valuation to stratospheric levels. Valued at nearly $90 billion, Shopify trades for over 55 times last year's sales, astronomical even for a fast-growing subscription software company. The company is unprofitable on an unadjusted basis, and losses are growing.
Shopify is a story stock, so valuation and losses don't really matter, at least not right now. What matters is growth and growth potential, and on that front Shopify delivers. Revenue was up 47% in the first quarter, and the most optimistic view of the company's total addressable market would be the entire online retail industry.
From the article.
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